Insulating poor from inflation without hurting growth: PM

Published: Thursday, February 17, 2011, 0:01 [IST]

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New Delhi, Feb 16 (PTI) With high food prices hurtingthe poor most, Prime Minister Manmohan Singh today said thegovernment was trying to insulate them from high inflationwithout compromising on economic growth.

"We want to deal it (inflation) in a manner that thegrowth rhythm is not disturbed," Singh said, interacting witheditors with television channels here.

He indicated the Reserve Bank was striking a balancebetween controlling inflation and economic growth.

"If we were concerned only in curbing inflation we couldhave done with pursuing tighter monetary policies.(But)..if inthe process the growth rate gets hurt that would not do ourcountry any good", the Prime Minister said.

The RBI has been tightening monetary policy by raisingkey policy interest rates. It has raised in seven instalmentsthe benchmark policy rates since March,2010, resulting inincrease in borrowing costs.

Singh said the general inflation was expected to declineto seven per cent before end of the current fiscal in March,while the Gross Domestic Product (GDP) was pegged at 8.5 percent.

On the back of sharp increases in prices of fruits,vegetables, milk, eggs and meat, food inflation has hurt thecommon-man most.

It has been hovering above 15 per cent in the past fewmonths before falling to 13.07 per cent in the last week ofJanuary. However, the general inflation is at 8.23 per cent.

Stating that the price rise, particularly of fooditems, has hurt the "poor- man most", the Prime Ministerreferred to global factors responsible for inflation overwhich the government has no control.

"We don''t have at our disposal" instruments to insulatethe economy from international events such as thedevelopments in Egypt, which have resulted in spiralling crudeoil prices.

"We don''t have control over international events... oilprices are rising, food prices are also rising," he said.

Singh said efforts were being made to insulate the poorthrough programmes like NREGA and keeping prices at state-runration shops unchanged since 2002.

The Prime Minister said the government is trying toprotect them through Mahatma Gandhi National Rural EmploymentGuarantee scheme, under which it provides a fixed wage of Rs100 per day, and by not raising the foodgrains prices underPDS.

He emphasised that the government would adjust the wageunder MNREGA with every rise in the Consumer Price Index.

"Although the inflation does hurt, we have put in placesocial safety nets which were not there six years beforeand that does not mean that we should not work together toimprove the situation," Singh said.

Besides, he said that "as far as foodgrains distributedthrough public distribution system are concerned, there hasbeen no change in prices since 2002".